The depletion of fossil fuel reserves, emission of greenhouse gases and the uneven distribution of existing reserves led the countries to look for sustainable alternatives, especially wind power. In India mostly Squirrel cage induction generators (SCIG) are used for extracting energy from the wind. Induction generators inject real power to the grid and absorb reactive power from grid. Normally, fixed capacitors of rating equal to no-load compensation are installed at the wind-turbine. Reactive power absorbed by the SCIG over and above the no-lad compensation is dependent on the operating condition. To compensate for the reactive power (over and above the no-load compensation) dynamic VAR compensator can be installed at the point of common coupling. When the wind-farm is connected to a weak grid there may be a problem with wind penetration into the grid. UPFC (a versatile FACTS controller) will be able to alleviate the problems associated with fixed speed wind-farms that are connected to a weak grid. In this paper finding the location and capacity of the UPFC for minimisation of power generation cost is posed as a non-linear optimization problem. An efficient Primal-Dual Interior Point algorithm in conjunction with second order sensitivity analysis is made use for solving the above problem. The optimal line placement for wind penetration in terms of marginal values of UPFC variables are identified using first order sensitivity analysis. Second order sensitivity analysis has been employed to identify the optimal line placement for highest cost savings. Further actual cost savings and optimal control settings of UPFC are evaluated by actually placing UPFC in each line. The proposed approach is tested on a sample 9-bus system using the program developed in Matlab and the results are encouraging. The results indicate that the estimation of optimal placement of UPFC for a large system is possible reducing the computation time involved.
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